E*Trade Looking Better?

Can the much-exaggerated claims of E*Trade’s possible bankruptcy finally be laid to rest? After being on holidays for a week I found this letter waiting for me after logging in to my E*Trade account:

To our valued E*TRADE Canada customers:

This morning E*TRADE Financial announced that it has strengthened its capital position and eliminated exposure to the types of asset-backed securities that have been generating business losses, as well as headlines, over the last several months. This has been accomplished through a strategic transaction with affiliates of Citadel Investment Group.

As part of this transaction, E*TRADE Financial has received a U.S. $2.5 billion capital infusion. This transaction, led by affiliates of Citadel, not only strengthens E*TRADE Financial’s capital position, but also represents a significant vote of confidence from one of the world’s leading investment firms. Further, Citadel has removed the entire $3 billion asset-backed securities portfolio from E*TRADE Financial’s balance sheet, solving the company’s most significant balance sheet issue. Citadel understands E*TRADE Financial has been faced with a challenged balance sheet, not a challenged business.

Today, with the infusion of additional capital, we reinforce customer confidence with the assurance that our parent company, E*TRADE Financial, has no exposure to the asset-backed securities that have been of concern to the marketplace generally during the past several months. As previously communicated, E*TRADE Canada has always been and remains well capitalized, with continued investment in high quality government-issued short-term paper and no investments in asset-backed commercial paper (ABCP).

As we turn the page to a new chapter, the reasons that you have chosen E*TRADE Canada – industry leading value, innovative products and strong service – remain as true as ever, and we will continue to work hard to exceed your expectations today, tomorrow and well into the future.

We appreciate your business and continued loyalty. Thank you for your continuing confidence in E*TRADE Canada.

Now I read that E*Trade’s stock is down another 29% since the Citadel deal and there is some negative press still; however I less worried now then I was before and I will be staying with E*Trade for now.

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